Functions of Reserve Bank of India

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The functions of the Reserve Bank of India can be divided into various heads discussed as below:

RBI as Monetary Authority of India

RBI works as the monetary authority of India and there by operates the monetary policy. Monetary policy refers to an umbrella of operations used for  the control of money supply in the economy with broad objective to maintain economic and financial stability; and ensure adequate financial resources for the purpose of development. More about this can be read here

RBI as Issuer of Currency

As per the provisions of the Section 22 of the Reserve Bank of India Act 1934, Reserve Bank of India has the sole right to  issue Bank notes of all denominations. Read in detail here.

RBI as Banker and Debt Manager to the Government

Central Government entrusts the Reserve Bank with all its money, remittance, exchange and banking transactions in India and the management of its public debt. The Government also deposits its cash balances with the Reserve Bank. Read in detail here.

Ways and Means Advances

Further, whenever there is a temporary mismatch in the cash flow of the receipts and payments of the State Governments, RBI provides them Ways and Means Advances (WMA). RBI helps both the central government and state governments to manage their public debt, float new loans, issue and retirement of rupee loans, interest payment on the loan and operational matters about debt certificates and their registration. RBI’s debt management policy aims at minimizing the cost of borrowing, reducing the roll-over risk, smoothening the maturity structure of debt, and improving depth and liquidity of Government securities markets by developing an active secondary market.

RBI as Banker of Banks

RBI is bank of all banks in India. The other banks keep their current accounts with RBI and RBI helps them in maintaining statutory reserves with itself. RBI also enables the environment for swift and smooth inter-bank transactions. Read more here

 RBI as a regulator and supervisor of financial system

One of the most important functions of RBI is to work as regulator and supervisor of financial system. RBI not only regulates and supervises the Indian Banks (details here) but also Foreign Banks (detail here), Regional Rural Banks, Local Area Banks, Cooperative Banks, Financial Institutions including Development Financial Institutions (DFIs) and Non-Banking Financial Companies.

Management of foreign exchange reserves

RBI manages the Foreign Exchange Management Act, 1999 to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. Details here

Developmental & Promotional roles

Apart from the above, RBI performs a wide range of promotional functions to support national objectives.

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Comments

  • Rakesh
    Reply

    Respected sir, please send the some technical term as CRR, BANK RATE, REPO RATE ETC. Explain the every term On my email id.

  • sushil pradhan
    Reply

    thanks to admin.
    it’s so helpful

  • selvi
    Reply

    sir, please send to the current affairs.

    • Atul kant

      Really its essential site for every students thanx a ton

  • anshuleig2010
    Reply

    current crr-4.75%

  • Trisha Roy
    Reply

    I wanted to save different articles but when I download every time it shows ‘this type of file may harm your computer’. Even I clicked to download it shows ‘download error’ in red. Kindly advice how this can be downloaded.
    Trisha Roy

    • GKToday

      @ Trisha,

      Usually Chrome gives this message for all kinds of downloads. I don’t think the pdf generated are would cause any harm to your laptop / pc.

  • Keerthana
    Reply

    current CRR is 4 %.. Pls update the site.. awsome site! quite helpful

  • Titas
    Reply

    current CRR-4%,SLR-23%

  • gv
    Reply

    CLR 4.50%
    SLR 23%
    REPO RATE 8%
    REVERSE REPO 7%
    BANK RATE 9%
    BASE RATE 9.75%
    MSF 9%

    • Priyank Sharma

      Somebody, pls explain centralized clearing facilities??

  • guriya
    Reply

    sir also provide updated material for sbi po 2014. bye the way your work is fantastic specially for banking.

  • SHIVANI TIWARI
    Reply

    RESPECTED SIR I WANT TO KNOW CURRENT RATES OF RR, RRR, CRR, SLR, BANK RATES

  • Rahul kumar kankrayne
    Reply

    RESPECTED SIR I WANT TO KNOW CURRENT RATES OF RR, RRR, CRR, SLR, BANK RATES

  • Seerisha
    Reply

    Sir,
    I want to know the rates of RR ,CRR,SLR ,Bank rate
    and bank terms and current affairs.please reply sir